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Comment by chadcmulligan | Hacker News Reader

Hitchhikers guide to the galaxy:

Earth - a small planet in the outer reaches of spiral galaxy M7529, so far the only planet on record that the semi-intelligent biped inhabitants managed to overheat so badly that they became extinct. Overheating has happened before, of course, however the method of overheating is unique - the inhabitants invented a method of identifying uniqueness by making large calculations and attaching small drawings to the calculations, they then proceeded to trade these tokens as something of value, using more and more energy and creating a runaway green house effect. This has been used as an example to disprove the existence of god.

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This was hilarious and well-written.

I've become extremely alarmed at the number of completely non-technical people who don't know anything about how cryptocurrency works getting extremely into it via YouTube click holes. It's obvious that these NFTs are capitalizing on it.

A guy I ran into at the hardware store today was talking to me and he didn't understand the concept of a cryptocurrency that has a stable value so that it can be used as a means of exchange.

He's an airline pilot and he just has tens of thousands of dollars invested in various crypto things that he heard about on YouTube and he's made a ton of money on it.. It was eerily reminiscent of conversations I had with people flipping houses in 2006.

> He's an airline pilot and he just has tens of thousands of dollars invested in various crypto things that he heard about on YouTube and he's made a ton of money on it.

"made a ton of money on it." Until he has sold those assets and turned them into a major, stable currently like USD in his bank account or a diversified collection of other assets, they are as reliable a store of value as Enron stock was in July of 2000.

Every single male friend of mine is talking about crypto. I am so tired of this topic.

That and Tesla.

I avoid the subject since a friend insisted on taking about Bitcoin with me during the funeral of HIS mother.

Isn't it interesting though that the people who don't have the technical understanding of why most cryptocurrencies at the core are unsustainable, just as the housing market was in 2006 are still the ones making money on it?

When betting in any market understanding people and psychology seems to be more important than understanding the product.

No, the price is going up, everyone on average is making money. In a bubble everyone tends to think they are very well informed and investing rationally and getting the psychology right.

"why most cryptocurrencies at the core are unsustainable" would you care to elaborate on such a sweeping statement?

It's also currently reminding me of the second-life land rushes from about that time.

Thanks for the compliment - I'd like to think he would agree.

I would be a bit more optimistic, here is my take on it.

Hitchhikers guide to the galaxy:

Earth - a small planet in the outer reaches of spiral galaxy M7529. Inhabitants with watery brains came up with technology to use their star energy directly for complex mathematical calculations. Our space archeologists still don't understand why the calculations were producing random outputs so they never managed to get out of their star system and used all their star energy for that. Their Dyson sphere is interesting place to visit because as of now, it is the only civilization that achieved building it and never managed to go any further.

I am reminded of the Shoe Event Horizon.

https://hitchhikers.fandom.com/wiki/Shoe_Event_Horizon

Loved it .... I've been craving a replacement for Douglas Adams for a while now.. Terry Pratchett was quite close.. but now he too is gone.. perhaps it's time for me to find other writers or write stuff myself..

How much for an NFT for this comment :)

I'm hoping we can do our NFT trading on non-PoW chains within the next couple years. This should reduce the environmental impact to that of baseball cards.

Or, there’s an idea, just generate a random string, bundle it with the artwork and sign the whole damn thing using good old RSA. Achieves the exact same goal, uses a fraction of energy and no fancy tech.

If the artist signs the NFT to you, then you can't track resales. It will always be signed as belonging to the original person who bought it. So basically this "alternative" to NFTs would be impossible to trade. It blows my mind that people still don't understand stuff this basic.

The only reason for tracking resales is to prevent double-spending, in other words, to create a false illusion of scarcity. The whole thing is a charade.

We already have artificial scarcity. It's called steam. You buy a game in steam, you can't resell it. This allows you to resell the things you buy.

You can't resell a game in steam because Valve doesn't let you, not because the game is being made artificially scarce. Which it is, but this is not the reason you can't resell it. The point is that reselling an NFT doesn't require a central ledger. The central ledger is necessary to prevent the same token from being sold multiple times by the same seller. In other words, to create the illusion that the seller doesn't have something (and therefore can't sell it) when in fact they actually have it.

Each NFT is separate. You can authenticate a digital game by owning the nft. The publisher can sell as many tokens as they wish, that's entirely different. The point is that they can't stop you from reselling, because it's on the blockchain, not on steam.

It cant be artifial scarcity when there is endless supply.

And how valuable is that capability?

That's up to you. It could easily replace steam for me. Or digital audio purchases.

It's what you're paying for.

Yeah, you could plausibly just transfer these things by having each owner sign an attestation of the new owner's public key. But since it looks like this junk will happen on a publicly accessible slow computer/database, I'm just hoping it happens on e.g. Solana instead of Ethereum.

Signing attestation by itself wouldn’t work because of double spending. You would need either a centralised database of who owns what or a blockchain.

Uh...no?

These can trivially be copied (double spent), which means they're just as scarce as any digital data. Valueless without some significant proof of violence and hyper censorship ability enforcing copyright protection.

The primary revolution of bitcoin was the invention of self enforcing digital scarcity.

The artist can sign a message including your public key. The message is verifiable using the artist's public key. If other people copy it, they're just copying the proof that it belongs to you.

If you want to sell it to someone else, you sign a message saying you give it to them and so on, forming a "chain" of signed transactions.

Any owner can sign as many receipts of sale as they want.

What stops an original owner (of the to-be-digitized asset) from selling an NFT on the same thing multiple times? Perhaps on multiple different platforms?

Nothing, but they can only sign the "first" once

They could mint or 'sign' as many as they want.

But like a painting that can be copied, people decide to disproportionately value the first one...just because.

sure, but unless they are signed in the same block, then there will be a "first".

If the NFT is just a pointer to a digital good, can't they have multiple "first" NFTs all referring to the same digital good?

Yes and no. If they minted multiple within the same block then yes. If not, then proof of first minted NFT could be verified by block height.

Can't an artist also mint as many NFTs as they want?

Congratulations, you just invented an inefficient PoS for a single use case!

The point being made is that it's trivial to create a proof of ownership system without using the blockchain.

The proof of ownership system described above is a blockchain where every single block is produced at irregular timestamp and contain a single transaction.

Can’t the subject of NFTs also be trivially copied? All you really have is a token that refers to a particular file and proves that you own a token that refers to that file. Everyone else is free to ignore the token and copy the original file at any time.

Is there something that you can only do via the token? Are there special events or access for token holders? I could see something like that being independently valuable, and interesting.

It's an "emperor has no clothes" kind of thing. A big farce, that's all it is.

The ownership of the NFT itself is verified through public-key cryptography, the blockchain adds nothing of value.

Some company can run a DB to record spends. Why trust a third party? Well with any crypto linked to real world outcomes you need it trust a third party. Be that tether or some NFT hustler.

Because if I'm a rich person wanting to spend stupid amounts of money on some 'original' work of digital art, I don't want to trust a third party store the ownership records that could easily be corrupted.

The ownership record in a public blockchain can't be corrupted.

Rich people entrust their entire wealth to third parties to manage it for them. Why wouldn't they trust a third party to keep some ridiculous record of ownership?

Because the entire ethos of the cryptocurrency space is about dematerializing trust from large, complex networks of humans with various carrot/stick incentives keeping them honest to trust based on cryptography and game theory dynamics of open distributed systems that can't be successfully cheated without a massive accumulation of power.

What do you mean dematerializing trust, can you put an example? As far as I know, trust is not made of matter, I don't know how it could possibly be dematerialized.

> The primary revolution of bitcoin was the invention of self enforcing digital scarcity.

I thought DRM already invented that.

ECC (curve 25519) would be preferable.

One random idea I had was to use cryptomining to “soak up” excess power: so, for example, you could build nuclear out to meet peak load and then set up mining rigs to use the difference between peak and the current load, subsidizing the cost of power production.

It’s probably a bad idea for other reasons, but it’s one way to reduce the environmental impact of PoW

It's a bad idea because the energy used is worse than wasted since all it does is contribute to an increase in the mining difficulty for the entire network, thus worsening the environmental impact. It's actually better for the environment to leave that energy completely unused rather than use it for mining bitcoins.

This isn’t necessarily true: if the subsidies spread clean power generation then the percentage of miners that have bad environmental impacts will decrease over time. Also, since this would make relatively clean power sources cheaper, it would help phase out fossil generation capacity.

They're not "subsidies", they're just profits earned from selling what was mined, nothing useful happened, it simply makes the blockchain needlessly more expensive for everyone because a nuclear power plant is dumping hashing power into the network. Green energy doesn't change the fundamental nature of PoW, it inevitably expands to consume all available energy because the more energy you can burn the more money you can make.

I disagree with the last part about direct proportionality between energy and money. But my real wonder is if we can use this hashed/mined out coins for something that is actually useful socially.(even if it is a transaction of services anonymously.) I keep wondering if we can create a crypto currency + IOT devices + energy tracking system that can value the coins you have based on the energy sources that fed into mining it. But it feels so complex that I am not optimistic about creating such a thing..

Why do you disagree? If I profit X per kWh why wouldn't I burn as many kWhs as I can?

Because not everyone is the "economically rational agent" that just wants to maximize profits as much as they can. May be you disagree, and think most people are and it's strong enough to be a normal distribution. (I am not sure it is, but i sure hope it is not a normal distribution and there are enough people outside).

It doesn't matter that not everyone is a "economically rational agent". What matters is that there are some of them. People who will reinvest their profit into more mining, to profit more and reinvest it further. The people who are currently fabbing their own ASICs and setting up mining farms in places where electricity is cheap. These people left unchecked will, over time, suck up all spare electricity generation capacity and eventually outbid quite a lot of normal electricity use.

Once again I disagree.. these "some people" need to be the majority(of anyone participating in these currencies) for this mining to stay profitable.. Of course i may be mistaken about that part of the reasoning, but I'm fairly confident about it. Please let me know if you think it is an unfair assumption.

Majority is counted by hashing capability, not by head count. Is it not?

Ah... I am talking about who gets to determine the cost of the coins.. So I assumed it's majority of the people who use it as a currency or exchange. But then that's my default assumption about crypto currencies in general and not sure that applies to NFTs..

The important part is that the profits from mining are used to reduce rates: so it’s subsidizing the power costs for the customers as well as offsetting the capital investment into the powerplant.

Any reduction in rates would drive up the costs for everyone else. The capital investment required to construct a nuclear plant utterly dwarfs anything that could possibly be earned by mining.

You can reduce the energy output of a nuclear reactor both through the moderation of the fission reaction (via control rods, coolant temperature variation, neutron poisoning, etc), and through moderation of the electrical generator turbine (slowing down the turbine speed, venting steam, etc).

There is no such thing as "excess power" for crytomining. Even if there was then that energy could just be stored using batteries or gravity storage or something, or it could be sold to neighbouring energy users, or it could be used in the grid and other more polluting sources could be scaled down instead.

> There is no such thing as "excess power" for crytomining.

I was thinking the idea seemed to have some validity.. For ex: storage of solar/wind-powered is critical and the current inefficiencies and batteries rely on lithium and alternatives are still in research.(http://worrydream.com/ClimateChange/#moving-storage) ..

so in theory there's a system that can be built around the excess energy(of renewable systems) + crypto mining as a incentive for taking up renewable energy setups.(Of course this cannot convert the mined stuff back to energy so it's a one-way stuff at best and has it's own cons and pros).

What I’ve generally heard about nuclear and the grid in general is that it’s cost-ineffective to build out generation capacity to meet peak demand and that nuclear power is relatively bad at meeting fluctuations in demand. Sure, you could use batteries or whatever to store/use the power that the grid currently doesn’t need. You could also build aluminum processing plants or arc furnaces or whatever. Cryptocurrencies would be interesting because the mined cryptocurrency could used to reduce rates to consumers.

This is called "Demand Response" and it's an important part of grid management. For example a factory will agree to decrease consumption when asked in exchange for lower rates.

Too much power is usually handled in the generation side by incentivize producers to scale back generation or even paying to have them take a plant offline.

For a bitcoin mining operation, I suspect it would not be profitable to have all that equipment sit idle except when there is an oversupply of electricity.

Another way to change this : Could crypto not make useful calculations instead of useless calculations? Like protein folding for example?

https://bitcoin.stackexchange.com/questions/20879/why-cant-w...

Like Folding@home? No crypto needed.

I was thinking that if you built for peak load, you could reduce the idle time to four hours or so a day.

Yup, this idea has already been explored, eg. here is an example of environmentally net-positive way of mining: https://www.bloomberg.com/news/articles/2019-12-06/why-bitco...

I don't see it as a net positive unless you believe high energy cost crypto is of high value to society. You have a large environmental impact in building out and maintaining a mining facility and transport infrastructure thereto, as well as the ongoing waste all the way down to the food put into the pieholes of the humans running the facility.

Net positive means the benefits, ie. eliminating huge amounts of CO2 that would otherwise be released into the atmosphere, outweighs the costs, ie. your list of capex+opex. Turning gas flares into miners is both ingenious and objectively net positive.

You could use mining to incentivize the build out of remote energy generation before transmission infrastructure is ready.

For example, drop some solar panels and miners in the middle of the desert and immediately start generating profit. Use the profit to deploy more solar panels and build out transmission lines. You can do this piecemeal at low initial investment to feel out an energy source without committing billions of dollars to build out.

I'm not aware of anyone who's done major operations like this, but with the profitability of mining so absurdly high right now plus scrutiny on using dirty energy sources, I wouldn't be surprised if it starts. Access to mining ASICs is likely the key bottleneck.

This is the story used to explain part of the reason so much mining is in China. They built out a ton of hydroelectric dams over the decades that have been underutilized due to lack of infrastructure. Miners came in for the unused electricity and brought in a ton of money to the area.

Or just stop the proof of work stuff. Just an idea.

I've seen a bunch of artists jump on https://www.hicetnunc.xyz (which uses Tezos, which apparently is a Proof-of-Stake chain?) after the "wait, ETH uses how much energy?!" shock.

It is LPoS. It means you're able to delegate your validation rights. So you don't need to run a node to participate in the staking process, you just delegate to a baker. And It's self amending. Every 3-4 months a proposal with upgrades will undergo a voting phase. All bakers are able to vote on this to accept or reject the proposal. The source code is written in a purely functional language on which formal verification is applied.

Sounds like bitcoin predictions coming true.

DON'T PANIC

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